BEN SISARIO NY Times 06/05/12
The man who corporatized the concert industry is back, and he wants to dance.
Robert F. X. Sillerman, the media executive who transformed the live music business in the 1990s by combining regional concert promoters into the nationwide powerhouse that became Live Nation, has returned to the business with the first of what he expects will be a string of investments in electronic dance music, the industry’s latest trend.
Echoing his strategy in the concert business, Mr. Sillerman is pursuing independent companies that put on dance festivals, D.J. parties and other events where the crowds might range from a few hundred people to tens of thousands. He said in an interview on Monday that his first acquisition was Disco Productions, a Louisiana company that was founded by a rave promoter, Donnie Estopinal, and puts on events throughout the country.
Mr. Sillerman, 64, said that in addition to that deal he was in negotiations with up to 50 other companies, and had tentative agreements with about 15 of them. He declined to disclose terms of the Disco Productions deal, but said that he expected his new company — which is called SFX Entertainment, reviving the name of his earlier concert business — to spend $1 billion on acquisitions within a year, and that he wanted to take it public this summer.
The plan for SFX, Mr. Sillerman said, is still being formulated but will involve using the Internet to connect fans of dance music. If his strategies from the 1990s are a guide, he might also want to deliver this aggregated audience to major advertisers and marketers.
“There’s a wave of interest in attending concerts that have less to do with the specific music and more to do with the experience attached to the music,” he said, referring to the immersive appeal of many large-scale dance events. “Our thought is that the experience of attending an individual event can be perpetuated and made better by connecting the people, not just when they’re consuming the entertainment but when they’re away from it.”
When Mr. Sillerman, who made his fortune in radio, turned to the concert world in the mid-’90s, it was dominated by independent promoters with regional fiefs. Promoters like Michael Cohl, who worked with the Rolling Stones and U2, and who is now the lead producer of “Spider-Man: Turn Off the Dark” on Broadway, were also beginning to put on global mega-tours with corporate sponsorships.
Over a few years, SFX spent $1.2 billion to buy dozens of regional promoters and combined them into a national organization. In 2000, Clear Channel Communications bought SFX for $4.4 billion. Clear Channel later spun off its concert division into Live Nation, which in 2010 merged with Ticketmaster to form Live Nation Entertainment.
“Bob changed the game that had been in place for decades,” said Josh Baron, the editor of the music magazine Relix and co-author of the book “Ticket Masters: The Rise of the Concert Industry and How the Public Got Scalped.”
He added, “He brought together promoters who were archrivals, and he brought Wall Street to the rock business.”
Mr. Sillerman’s corporate approach to the concert industry has had its detractors, who say that it has led to higher prices for consumers and contributed to a hypercompetitive bidding process that has made events far riskier to put on.
Live Nation has also had problems. Since going public in 2005, it has never turned an annual profit. But Mr. Sillerman said he believed that the basic business strategy behind combining multiple concert companies was sound. “The fundamental premise that combining businesses that are inefficient and making them more efficient always makes sense,” he said.
Mr. Sillerman’s investments are only the latest in a wave of corporate interest in dance music. Long considered a stable if marginal genre, dance has lately entered the mainstream as never before, drawing more than 100,000 fans to festivals like Electric Daisy Carnival in Las Vegas and Ultra in Miami. This week Electric Daisy is sponsoring a business conference in Las Vegas called EDMbiz, before the festival returns this weekend.
Live Nation has also been moving aggressively into dance music. Last month it bought a major British festival promoter, Cream Holdings, and last week it announced that it would be putting on a two-night dance event, Sensation, at the new Barclays Center in Brooklyn in October.
Mr. Sillerman — whose own tastes lean to Bob Dylan and Paul Simon — said that after setting the overall corporate strategy for the new SFX he expected to leave regional promoters like Mr. Estopinal to put on events the way they saw fit. But the popularity of the dance genre and the promise of connecting audiences on the Internet, he said, had enormous profit potential.
“I’m confident we’ll do an excellent job empowering these kids to be as good as they can be,” he said of the promoters he expected to bring into the fold. “I’m also confident that we will create a better experience for the fans. Can we monetize that? If we can, this will dwarf the first SFX. That’s the whole game.”